January 19th, 2010 at 10:07pm
Under Stock Market
Online stock market trading has made it possible for millions of individuals, especially those who are not keen on investing in stocks the traditional way, to play the stock market game. Almost anyone, from novice investors to expert day traders, can participate in online stock market trading.
But online stock market trading has many dangers and if you are nit careful you could end up losing instead of earning lost of money.
Online stock markets trading allow individuals to participate in the stock markets at greater speed. But because of this, it has also become easier to make investment mistakes. Therefore, the fundamentals of smart should still be applied in online stock market trading to avoid falling into traps.
One of the most common problems with first-timers in online stock market trading is they think they can make a lot of money online even without any investment skills and knowledge. This is probably brought about by stories of overnight successes. They must keep in mind that for every ten investors that makes lots of money from online stock market trading there are at least ten who lose money.
New online stock market traders think that they could survive in online stock market trading without any investment skills and knowledge is because markets have been bullish recently. For the past six or seven years, common investors made significant profits from any buy and hold strategy. Investors only start to realize the importance of being financially savvy when markets show bearish signals. That’s the only time they employ smart financial planning through diversification.
What potential online stock market investors need to realize is that online stock market trading is really no different from traditional stock market treading. The web hasn’t changed the fundamentals of smart investing it has only made it easier to invest. Individuals – like most professional day traders – should still have a set of rules and guidelines to help them avoid the dangers of online stock market trading.
Like in traditional stock market trading, the first thing you have to do is to arm yourself with basic information about the company you’re investing into so as to avoid “gambling.”
Perform some fundamental analysis to determine if the stock is worth the price. You can do this by researching. Good source are websites of major brokerage houses, finance publications and mutual-fund companies.
Because online stock market trading is easier, it becomes tempting to trade often. But it’s tough to beat the market on a consistent basis. For the long term, a buy-and-hold strategy is the best way to invest even in online stock markets.
By admin
December 28th, 2009 at 05:44am
Under Stock Market
Stock is ownership in a company. Each share of stock represents a small piece of ownership. The more shares a person holds, the more part of the company he owns. The more part of the company a person owns translates to more dividends he earns when the company profits.
A stock market is a market for the trading of publicly held company stock as well as associated financial instruments such as stock options and stock index futures. On the other hand, stock market trading is the buying or selling securities or commodities specifically in the stock market.
There are two basic methods of doing stock market trading. Traditionally, stock markets where open-outcry where trading happened on the stock exchange floor. The more modern way of doing stock trading is through electronic exchanges where everything occurs online real-time.
Stock market trading via the exchange floor could not look any more chaotic. When the stock market is open, hundreds of people are seen rushing about, shouting and gesturing to each another on the exchange floor. Traders are also often seen talking on phones, keeping a close eye on the consoles and entering data into terminals.
Online stock market trading moves the trading off the floors and more into the networks. The electronic market employs a vast network of computers to match buyers and sellers instead of human brokers. While lacking the excitement of the usual stock market exchange floor, it is faster and more efficient. Investors frequently get an almost instant confirmation on any trades done.
How does stock market trading work? Be it on the chaotic stock market exchange floor or electronically, one needs to get an investment broker first.
For traditional exchange floor trading, after asking a broker to buy a certain number of shares at the market, the broker’s order department sends this order to the clerk on the floor. The clerk alerts a trader who finds another trader who is willing to sell the shares the investor requested. The two traders agree on a price for the stocks and close the deal. Notification is sent back the same way until the broker calls the investor to inform him of the final price. This process may take a while depending on the market and stocks. Days later, the investor receives the confirmation mail.
The electronic counterpart is less complicated because the stock buying and selling are matched by the computers in real-time. And the investors get instant updates on what happens to his stock trade.
By admin
December 12th, 2009 at 11:52pm
Under Stock Market
There are all sorts of participants seeking to profit in today’s markets. For every personality type there is a corresponding style of approaching Wall Street. Some are long term investors seeking to identify stable companies to park their cash well into the future. Others seek quicker profits through stock market trading.
One must look inward to determine which type best suits you. How high is your tolerance for risk? What are your investment objectives? Each person has different goals while at different stages of their life. A suitable strategy needs to be derived fitting your circumstances.
Many advise that the best time to take additional risks is when you are young. When a long life of earnings lay ahead, losses are easier to absorb. This is not the case as one begins to approach retirement. Advice from a financial advisor is often helpful when making these decisions.
If you end up seeking to be a long term investor this entails viewing things with a patient mind set. Buy and hold investors must ignore the everyday swings of the market and allow their portfolios to flourish over the course of years, not months. There are several methods to buy stocks if you seek this style.
One prominent such method is called dollar cost averaging. To employ this strategy one invests an equal amount of money in a given stock on a monthly basis. This investment is made no matter what the stock is doing at that time. It can be going up or down. This removes emotion and serves to reinforce discipline. It also translates to a basis equating to the stock’s average trailing trading price.
If you aren’t blessed with this level of patience then maybe trading is more for you. As opposed to investing, a trader is looking to exploit shorter term movements in a given stock. Many active traders use technical analysis to help guide their decisions. Others rely on an increasing array of automated trading programs on the market.
Some in this class hold stocks weeks to months. Others, referred to as daytraders, hold for minutes. A brokerage account with very low commissions is paramount for this class of trader. Great profits can be made, however studies have shown the majority of daytraders end up losing money in the end.
Stock market trading can be done in many different styles employing varying strategies. Some are passive investors who buy stocks for the long term. Others are hyperactive traders turning over positions several times within one day. Whichever path you choose do your research and trade intelligently.
By admin
December 5th, 2009 at 01:18am
Under Stock Market
Stock market trading is a popular way to earn money with unlimited earning potential when you completely understand how things work. And with a few basic how to’s, it can be easy to get started.
So What is Stock?
Stock is actually owning part of a company. Each share of stock stands for a small slice of ownership in the overall corporate pie. When a person holds more shares, he owns a larger portion of the company. Owning a greater portion of the company means bigger dividends are earned by the shareholder when the company profits.
About The Stock Market
The stock market is the forum where publicly held company stock and related financial instruments are traded. Financial instruments may include stock index futures and stock options. Stock market trading is the actual sale or purchase of commodities or securities in the stock market itself.
The Two Ways To Trade
Basically, there are two methods of stock market trading. The traditional way of trading occurs in an open outcry manner on the stock exchange floor of the stock market. Modern stock trading is conducted via electronic exchanges and all occurrences take place in real time online.
On the stock exchange floor, the stock market trading atmosphere is chaotic and noisy. The stock market is filled with hundreds of people gesturing, shouting and rushing around when the stock market is open. Stock traders are seen chatting on phones, entering data into computer terminals and watching the consoles closely.
With online stock market trading, computer networks are used as opposed to trading off the stock market floor. A large network of computers is employed to match sellers and buyers in the electronic market instead of using human stock brokers. Although this method is not as bustling and exciting as the stock market exchange floor, it is quicker and more effective.
How To Get Started
What is the first step to take when stock market trading? Whether a person decides to invest electronically or on the stock market exchange floor, the first step is to get an investment broker.
To start traditional stock trading on the floor, a person requests the broker purchase a said number of shares on the market. Once the request is made, the order department for the broker forwards the order to the floor clerk. The clerk then alerts a trader to locate another trader who will sell the shares the investor wanted. The deal closes when the two traders agree on a price with notification sent back the same way. Ultimately, the broker gets in touch with the investor to tell him the final price for the shares. The entire process may take awhile, based on the current market and stocks. After a few days, the investor will finally receive a confirmation in the mail.
Investing electronically is much faster and far less complicated. Computers match the buying and selling of stock in real time. Savvy investors have the distinct advantage of instant updates on stock trade happenings.
By admin
July 21st, 2009 at 08:55pm
Under Stock Market
Traders have it easy. They buy into a stock and get out of it very quickly. All day long they buy and sell, buy and sell. At the end of the day they tally up the profits and losses and they know how well they’ve done. It’s a good day when they’ve got more money than they started with. The problem with trading is not everyone has the time or patience. To be a market trader you need to spend your entire day watching the markets. Traders by their very nature are focused on the short term. Almost everyone else focuses on the long term. Most investors are of the “Buy and Hold” variety. These long term investors aren’t focused on the next few days. They’re looking years and in some cases decades down the road. You might even be one of them. Because you’re focused on the long term you have a unique set of challenges. The 10% rule of thumb. I’m sure you’ve heard this before. As a rule of thumb, markets return on average 10% per year. Brokers love to quote it, investors talk about it, even as an investment banker I used it a time or two. This data point is referring to a very long term average. Like anything sometimes you do better and sometimes you do worse. Most people don’t know this important fact. The 10% return isn’t always from prices going up. A portion of this long term average return is from dividends. Dividends play a very important role in most long term investment strategies. I recently read a study analyzing stocks. What they found was amazing. Investors captured a better return from one particular group of stocks. Companies that paid a dividend and consistently increased that dividend provided a better return than all other stocks. The performance was increased by almost 2.2%. I know that doesn’t seem like much. But remember, we’re looking at long term buy and hold strategies. The difference of 2.2% over 30 years is substantial. For an investment as little as $100 the 2.2% difference amounted to over $1,800 in 30 years! When a company pays dividends it highlights the company’s health. Increases in the dividend show the Board of Directors is confident in the future of the company. Clearly, owning dividend paying stocks is important to most investment portfolios. But, you can’t just rush out and buy any stock that pays a dividend. It’s important to find dividend paying companies with strong financials. The first two things I look at are the dividend history and the payout ratio. I like to see companies with long histories of paying dividends. I like to see 10 to 20 years, or more. This is a sign management knows how to run the business through all types of economic cycles – both good and bad. A company that can consistently send dividends to its shareholders speaks to the stability and strength of the company. The second data point I look at is the payout ratio. The payout ratio is simply the amount of a company’s earnings that are being sent to the shareholders. It’s normally expressed in terms of a percentage. So a company with a 45% payout ratio sends 45 cents of every dollar it earns to shareholders. The payout ratio can highlight a big red flag. If I see a company’s payout ratio close to 100%, I tread very carefully. Companies that send out a significant amount of their earnings in dividends may be looking to cut those dividends soon. On the other hand, the payout ratio can also toss up a big green flag. If a company has a really low payout ratio, this might signal the board is about to raise dividends. And that can be a great time to buy. Just having a strong dividend isn’t foolproof. Just look at all of the financial stocks that have recently cut their dividends. So, how do we invest for dividends? If you want to take the time, and you have a big enough portfolio, you might look at individual stocks. Make sure to diversify and remember to closely monitor your selections. An easier way is to buy a mutual fund focused on dividend stocks, or maybe an ETF. You all know how much I like ETFs. iShares has a dividend focused ETF matching the Dow Jones US Select Dividend Index (DVY). This fund invests in US based companies. They look closely at dividend growth rates, payout percentages, and yields, among other factors. It’s a convenient way to buy a basket of dividend paying stocks and capture a great yield of over 4.5%.
Brian Mikes is the editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today. In addition to dividend stock trade ideas, you’ll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit. Click here to start your free subscription today: http://www.DynamicWealthReport.com/new.htm
By admin
December 28th, 2008 at 12:13pm
Under Guest+ Option Trading+ Stock Market
The many fears of a newbie in the stock investment business are not misplaced.
They are real. Perhaps, as a newbie, you may have suffered some form of loss
in your first attempt trading the market – thus making you loss faith and enthusiasm
in your trading techniques and the pursuit of your investment objectives, especially
now that the global stock market seems to be resting permanently in the south.
Such feelings of trepidation is not common to you, even the pros experience it
once in a while. Don’t be perturbed, it’s well. All the same, the guides enshrined
below could positively impact on your trading result if followed and applied
religiously. Use it as a checklist.
(1) Investigate Before Investing: it is very important that you don’t invest your hard earned money in any form of investment without first investigating the firm you
wish to buy into. Find out any means to get information about the firm, if possible
pay a personal visit to the firm for inside information. Result from such findings could
quite revealing. Invest only when the result of such research are positive. Your money
remains your while its yet with you. (Thou shall not invest without investigating).
(2) Research: Its imperative that you conduct research on the best stock to add to your portfolio. Take time to analyze the past performance, dividend payout policy, bonus
history, and other investment index.
(3) Trade With Your Extra Money: Thou shall not invest with money that will not allow you to sleep in your bed. The general rule of all investment that carries some form of risk is that investors should invest with what they can afford to loss. In case you loss your money, don’t loss your savings.
(4) Seek Information Online: Be active in forums and blogs where investors and newbie alike meet on a daily basis to discuss matters affecting members of the group. This will put you in the fore front of investment information and also as leverage for
building relationship.
(4) Follow Up Your Investment: Monitor and nourish your investment. The stock market is unpredictable. Be ready to react swiftly to any information can promote or put your investment in jeopardy.
(5) Attend Seminars and Workshop: As an investor whether newbie or a pro, make it a policy to attend seminars, symposia, or workshop on a regular basis. Attend at least one seminar every quarter and it shall be well with you. The gains from attending seminars can at times not be quantified. Hear this: a woman just retired from a regular
Job once had the opportunity to attend a seminar. During the seminar , she was presented with an investment opportunity about a firm that was in the verge been takeover by a core investor. She acted on the information and invested about $25,000. She made over 800% of that amount in less than 90 days. What an obscene profit!
(6) Check Stock Behavior: Thou shall know the behavior of every stock of interest for in so doing you shall know when the stock will be low or high. The stock trend of price gives you an idea of year low and high. Most stocks take the behavior of the management of the company, and trend in the way the company releases results.
(7) Know the Market: Thou shall understand the market and how it works for in so doing you will know how to plan for profit taking. Know what it takes to make money from the public offer, private placement, and the secondary market.
(8) Know Why Buy the Stock: Do not buy any share because others are buying it or buy under pressure or sentiment. Buy because you have your reason of buying.
(9) Know When to Sell: Thou shall know when to exit the market. Don’t be greedy in your exit strategy. Don’t sell because others are selling. Rather, sell because you have a reason for selling.
(10) Closure of Register: Thou shall apply the principle of closure of register, for it shall guide you on when best to sell. Never buy a stock a day after closure of register.
By admin